remortgaging next year on 100% mortgage: advice pls?

larryuk

hi all,

Just looking for a bit of advice if possible.
Last July (07) myself & (now) wife took out a 100% mortgage with A&L for £164k
It is interest only and is 4.75% fixed which ends july 09.

The mortgage was actually made up of a 5% unsecured loan, and 95% mortgage, but it was all part of the mortgage deal.

My question is with regards to preparing for the end of the fixed term period, which if we do not change, will be 2% above base rate.

I know that many things may change between now and next year, but I was wondering what the likelyhood would be of us being able to remortgage bearing in mind that 100% mortgages seem to be a thing of the past!

We currently pay just over £800 a month ( that includes the loan/mortgage payment) but without a remortgage that is likely to increase by about £200 a month.

We have some credit card debt that we are trying hard to clear but being able to keep our mortgage as cheap as possible in the short term will be most important to us.

getmore4less

You will almost certainly be stuck with whatever A&L will let you have since you will most likely have negative equity.

Perhaps someone will now what A&L do with these sort of deals.

I would head over to the debt free wanabee board and start to tackle the problem that way hitting the high rate debts hard now will help free up money to pay the incresed mortgage if/when that happens.

wymondham

As above, you'll probably be in negative equity, so unless you have savings to move away, you'll be stuck with the SVR rate...

koexelek

wymondham wrote: »

As above, you'll probably be in negative equity, so unless you have savings to move away, you'll be stuck with the SVR rate...

A & L might offer something better than svr if the borrower agrees to stay with them though

larryuk

thanks for the comments so far. With regards to the equity in the house, I have checked locally and houses similar to ours seem to be going for approx £10k more than we paid, but who decides how much the property is worth when it comes to remortgaging?

zzzLazyDaisy

the lender's surveyor

getmore4less

larryuk wrote: »

thanks for the comments so far. With regards to the equity in the house, I have checked locally and houses similar to ours seem to be going for approx £10k more than we paid, but who decides how much the property is worth when it comes to remortgaging?

Is that asking prices or selling prices?

check http://www.rightmove.co.uk/soldprices.rsp

remember this has a few month lag.

beecher

koexelek wrote: »

A & L might offer something better than svr if the borrower agrees to stay with them though

Are they likely to do so if they know the borrower can't leave due to having an LTV of more than 90%? Genuine question.

koexelek

beecher wrote: »

Are they likely to do so if they know the borrower can't leave due to having an LTV of more than 90%? Genuine question.

and a very good question.

If a lender genuinely wants to help a borrower they will. After all, their overall risk is just the same, and it will tie the borrower in for longer.

However, some lenders like to kick people when they are down, and compound people's misery.

I really hope A & L are in the former category

mazza1985

If you started off with a 95% mortgage, assuming you have a 25 year repayment mortgage you will be paying off roughly 6% of your outstanding balance each your. This works out at being 7.2% over 2 years. (remember interest is charge on your interest here.)

So if you started off with a 95% mortgage (£155800), and have been paying it off your 2 years, then you owe 92.8% of your 95% mortgage. (£144582 +interest) (which at 4.75% will mean you are paying back around £2 for every pound you borrow (someone tell me if I am wrong here) so total repayments are £290000 ish. So you currently owe 19800 quid less than what you did when you got the mortgage out.

You have 2 options.
One would be to try and remortgage with a+l. Most compaines are happy to do this, rather than lose your custom. The mortgage market is DIRE at the moment, everyone is fighting for customers,

The other one, is to convert to part repayment part interest, or interest only for a couple of years. This will only work if you can put saving plans in place to repay the capital at some point. It will reduce your monthly payments on the higher interest rate untill you have paid off enough capital to negoiate a better rate.

I hope this has helped.

maninthestreet

mazza1985 wrote: »

If you started off with a 95% mortgage, assuming you have a 25 year repayment mortgage you will be paying off roughly 6% of your outstanding balance each your. This works out at being 7.2% over 2 years. (remember interest is charge on your interest here.)

So if you started off with a 95% mortgage (£155800), and have been paying it off your 2 years, then you owe 92.8% of your 95% mortgage. (£144582 +interest) (which at 4.75% will mean you are paying back around £2 for every pound you borrow (someone tell me if I am wrong here) so total repayments are £290000 ish. So you currently owe 19800 quid less than what you did when you got the mortgage out.

You have 2 options.
One would be to try and remortgage with a+l. Most compaines are happy to do this, rather than lose your custom. The mortgage market is DIRE at the moment, everyone is fighting for customers,

The other one, is to convert to part repayment part interest, or interest only for a couple of years. This will only work if you can put saving plans in place to repay the capital at some point. It will reduce your monthly payments on the higher interest rate untill you have paid off enough capital to negoiate a better rate.

I hope this has helped.

The OP stated it is an INTEREST ONLY mortgage, so no repayments of the principal would have been made.